Hong Kong Tax System
There are several reasons for investors coming to Hong Kong for establishing their operations and one of the determinant is Hong Kong’s tax regime – well-known for its attractive corporate and personal tax rates, non-taxable capital gains, one tier tax system and extensive double tax treaties.
The Hong Kong tax system is territorial in nature, with tax levied on income arising in or derived from Hong Kong.
The purpose of this guide is to provide a general overview of Hong Kong’s tax system and tax rates.
Profits Tax in Hong Kong
Corporations, partnerships, trustees, bodies of persons carrying on a trade, profession or business in Hong Kong are subject to tax on profits arising in or derived from Hong Kong. Profits from sale of capital assets are specifically exempt from profits tax.
Profits Tax Rates
From the year of assessment 2018/19, the profits tax rate for the first HK$2 million of assessable profits are lowered to 8.25% (half of the current profits tax rate) for corporations and 7.5%(half of the standard rate) for unincorporated businesses(mostly partnerships and sole proprietorships). This tax rate concession is restricted to only one enterprise nominated among connected entities(i.e. has control over the other party or under common control of the same party).
Filing Profits Tax Return
The filing deadline for Profits Tax Return(PTR) is as follows. *Accounting year ended
Between 1 April to 30 November (“N Code”) Filing deadline: Within one month of PTR receiving date
Between 1 December to 31 December (“D Code”) Filing deadline: 15 August of the following year
Between 1 January to 31 March (“M Code”) Filing deadline: 15 November of the same year
Generally, a newly incorporated company will receive its first profits tax return around 18 months after the date of incorporation and the filing deadline is 3 months from the date of issue of the first profits tax return.
The documents to be submitted are as follow: - Tax computation and supporting schedules - Audited financial statements
- Profits Tax Return ❖ This article has been prepared for general informational purposes only and is not intended to be relied upon as professional advice. Please consult with professionals in each area of accounting, tax or others for specific advice. [email protected]ㅣ+852 3913 9511ㅣ+852 3913 9548